Out-Law News 3 min. read

Updated CMA guidance adds to universities’ obligations and enhances students’ consumer rights

Revised consumer law guidance issued by the UK’s Competition and Markets Authority (CMA) contains a series of new obligations for higher education (HE) providers to comply with.

The new guidance (79-page / 729KB PDF) updates previous advice the CMA first issued in 2015 by incorporating more recent guidance published by the regulator, and places new obligations on academic institutions as a result of changes to higher education during the Covid-19 pandemic.

Rami Labib of Pinsent Masons said: “All HE providers must comply with consumer law and providers registered with the Office for Students (OfS) must also comply with ‘Condition C’ of their conditions of registration in respect of protecting the interests of all students and be able to demonstrate that they have given due regard to relevant regulatory guidance about how to comply with consumer protection law.”

“We have recently seen an increase in the OfS undertaking investigations into HE providers’ compliance with Condition C, including the OfS exercising its regulatory teeth. It is therefore important that institutions reflect on the new CMA guidance and ensure their student terms and conditions, offer letters and associated policies and procedures are updated as appropriate to ensure compliance with the latest guidance,” he said.

Under the new guidance, higher education providers are required to explain to students in course information how their programmes will be delivered – whether in person, online, or via a blended approach – as well as the study location. These changes follow a period in which HE providers were forced to make a number of changes to service provision during the Covid-19 pandemic.

The CMA has also stated all pre-contract information provided to prospective students, such as information provided on webpages or applicant portals, must be accurate, and that institutions cannot contract out of this obligation. If they do, any wording, such as disclaimers, would potentially be unenforceable.

If institutions envisage a change to pre-contract information prior to a student’s enrolment, they have to make this clear to prospective students – including what might change and why. The guidance makes clear that such changes should not be referenced in any small print.

The CMA has further clarified its expectations around the offer of deferrals and how these should be communicated to students.

It said: “We consider that the CPRs (Consumer Protection from Unfair Trading Regulations 2008) and unfair terms legislation are likely to require key information to be given regarding the HE provider’s policy and terms on deferrals. This would include the potential impact on the prospective student of deferring entry for a year. If the issue of deferral arises after a place has been accepted then, in our view, the CPRs are likely to require information to be given again on any key matters that would be likely to influence the student’s decision to defer admission to the course. This would include, in particular, transparent information on the level of fees for that year if they could increase, and any other significant potential aspects of the course that you know will or may change during the deferral period.”

Under the new guidance, institutions are also expected to cease the practice of having students agree to new terms and conditions at re-enrolment for each year of study.

The CMA said: “The contract for educational services is for the full duration of the course, with milestones to be achieved in order to progress to the next year or other period of study. The CMA would be concerned if an HE provider were to say that a student had accepted or had to accept that there would be a new contract at re-enrolment for each year of study. Such a term could be interpreted or used as a means to bypass the requirements to obtain express consent to changes under the CCRs (Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013) … and/or as a way to vary terms of the contract... In the CMA’s view, this may breach consumer protection law.”

The CMA also gave additional guidance on the enforceability of exclusion clauses, including that exclusions should not go “further than strictly necessary to achieve a legitimate purpose”. It specifically addressed how HE providers should approach referring to ‘force majeure’ events in their student contracts.

“The words ‘force majeure’ are sometimes used as a blanket term to describe events which are completely outside the trader’s control, however this is legal jargon and best avoided, and should never be used without clear explanation,” it said. “In addition, such terms should not enable the HE provider to refuse redress where it is at fault, for example in not taking reasonable steps to prevent or minimise problems.”

The CMA also said that HE providers that deliver courses in partnership with others need to make clear to students who they are contracting with for delivery of their educational services and who is responsible for said delivery.

As the UK’s primary enforcer of consumer protection law, the CMA is increasingly active in investigating suspected breaches and taking enforcement action. Proposals in the Digital Markets, Competition and Consumers (DMCC) Bill will significantly strengthen the authority’s enforcement powers, allowing it to determine when consumer law infringement had occurred and to impose substantial financial penalties on businesses and individuals without resorting to court proceedings. 

The DMCC Bill will also have impact on substantive consumer protection law – it will revoke the CPRs and recreate their effect in the new legislation, with some minor amendments. The OfS already has powers to fine HE providers that breach consumer protection law, as well as the ability to remove institutions from the register of higher education providers.

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